Hilal Foods (Pvt.) Limited (‘Hilal Foods’ or ‘the Company’) is an unlisted Private Limited Company, incorporated in 1957, under the erstwhile Companies Ordinance, 1984 (now the Companies Act, 2017). The Company’s registered office is located in Karachi.

Mr. Naeem Munshi alongside his father, Ali Muhammad Munshi established the Company “Hilal Foods (Pvt.) Limited” in 1957 as a private unlisted Company, named as Hilal Confectionery (Pvt.) Limited. Later, it merged with Kings Foods Company in 2013 and was renamed as Hilal Foods (Pvt.) Limited. The Company’s product line consists of more than 40 products including its flagship products; “Ding Dong”, “Freshup”, “Aamrus Candy”,  “Chooran Chatni”, “Limopani”, “Jiggles”, “CupKake”, and “Bake Time.”

The company operates through its Confectionery and Baking segments, with a combined annual production capacity of 11.426 million units. Currently, the company is utilizing 55% of its total capacity, reflecting prevailing market demand. It maintains a global presence in over 40 countries and offers a diverse portfolio of stock-keeping units (SKUs). The company’s head office is located in Karachi.

As of December 2025, Mr. Naeem Ali Mohammad holds a 58.05% stake in the company, down from 96.76% in CY24, reflecting a significant dilution through the redistribution of shares among immediate family members. His spouse, Mrs. Naqiba Naeem, holds 10.49% compared to 0.81% previously, while their children, Mr. Fahad Munshi and Mr. Faisal Munshi, each hold 10.65% (up from 0.97% each), and Ms. Neha Munshi holds 10.16% compared to 0.49% previously. The revised shareholding structure indicates a shift toward broader family ownership, in line with succession planning and intergenerational wealth transfer, while majority control remains with Mr. Naeem Ali Mohammad.

Hilal Foods is a family-owned company with a legacy spanning three generations. The foundation was laid by the grandfather, and the father expanded and led the company to its current stage. Today, his three children, two sons and a daughter, together with a team of top professionals, are driving the company toward new heights.

The sponsors bring extensive experience and expertise in the food and baking industry. Their strong business acumen has been instrumental in driving the Company’s sustained success. With deep industry knowledge, hands-on experience, and strategic foresight, the sponsors have played a pivotal role in shaping the Company’s growth and long-term achievements.

The Company has successfully diversified into various food segments. Additionally, the Company draws its financial strength from its group entities, including Shalimar Foods, Hilal Care (Pvt.) Limited, and Hilal Retail Brands (Pvt.) Limited (Dominos Pizza).

The Company’s Board consists of four members, including the CEO. There are no independent directors, with governance and strategic oversight provided by the family members.

Mr. Naeem Munshi serves as Chairman of the Board. A graduate of Sindh University, he brings over 45 years of experience in successfully leading one of Pakistan’s largest confectionery and baking businesses. His exceptional leadership has been a key driver of the Company’s growth. He also serves as Chairman of Hilal Group and Macpac Films Ltd.

The Company has not yet established formal Board committees, representing an opportunity to further strengthen its governance framework. The Board convenes quarterly, with all meetings appropriately documented, demonstrating a structured approach to oversight and accountability. The Company is actively pursuing a fast-track transformation to align with the Code of Corporate Governance and adopt best practices, which is expected to enhance governance processes, support more informed decision-making, and improve overall Board effectiveness.

The Company’s financial statements for the year ended June 2025 have been audited by BDO Ebrahim & Co. Chartered Accountants, a QCR-rated firm, which issued an unqualified opinion, confirming their accuracy and compliance with applicable standards. The firm is recognized as Category ‘A’ on the State Bank of Pakistan (SBP) panel, underscoring its credibility and expertise.

The Company operates under a horizontal organizational structure, with department heads reporting directly to the CEO. It maintains a well-defined departmental framework covering key functions including Production, Sales & Marketing, Research & Development (R&D), Finance, Human Resources, Legal, Quality Assurance, Information Technology, Supply Chain, and Internal Audit. Each department operates independently under the leadership of its respective head, ensuring streamlined reporting, clear accountability, and operational efficiency.

Mr. Fahad Munshi serves as the Chief Executive Officer (CEO) of the Company and also holds positions as Executive Director at Hilal Care and Hilal Retail Brands, and Non-Executive Director at Macpac Films Ltd. He holds a B.Sc. in Marketing from Bentley University and a Financial Diploma from Harvard Business School. With over a decade of experience in food manufacturing and the FMCG sector, he brings expertise in process optimization, product development, and innovation. Under his leadership, the Company restructured its organizational framework, launched prominent brands and marketing campaigns, secured a “Grade AA” rating from the British Retail Consortium (BRC), and implemented enterprise-wide systems including SAP S/4HANA and SalesFlo, a sales and distribution MIS system, all supported by a skilled team of professionals driving operational excellence.

The Company has well-established management committees, including the Treasury Management Committee, Sales Review Committee, IRD Committee, Sales & Operations Planning Committee, Financial Review Committee, Internal Audit Committee, HR Committee, and IT Steering Committee. The CEO and the heads of the respective committees actively participate in decision-making, ensuring effective governance, oversight, and strategic alignment across all functions.

The company employs SAP S/4HANA, software, a specialized inventory management solution tailored for manufacturers and tool producers. To ensure optimal performance, the software is continuously monitored and maintained by the vendor.

The Company has a dedicated internal audit function supported by an audit committee that meets quarterly under the chairmanship of an independent consultant to ensure efficiency and accountability. A formal Regulatory and Legal department oversees all legal matters, while the Quality Assurance department manages regulatory compliance for products and processes, including licensing and registration with PSQCA, PFA, SFA, SEPA, and other relevant authorities. Product and process development is led by the Innovation & Research Department (IRD), which evaluates regulatory requirements in line with applicable laws and customer specifications, ensuring both compliance and innovation.

The sector recorded production of ~5.8Mn MT in FY25, declining by ~14.3% YoY due to subdued discretionary demand amid previously high inflation. Export performance remained mixed, with Sugar Confectionery exports declining by ~20.0% YoY to ~USD 89.5 million (FY24: ~USD 111.9 million), while Pakistan continues to export these products primarily to Afghanistan, the Middle East, the United Kingdom, and the United States. The industry remains highly sensitive to fluctuations in key raw materials such as sugar, wheat flour, edible oil, ghee, and milk, many of which significantly influence the confectionery segment. During FY25, sugar prices averaged ~PKR151/kg (FY24: ~PKR 146/kg) and increased further in early FY26 due to exports tightening domestic supply, while milk prices averaged ~PKR197/liter in FY25 and rose to ~PKR203/liter in 6MFY26 amid structural inefficiencies in the dairy sector. Raw materials account for over 70% of total production costs, highlighting the industry’s strong exposure to agricultural commodity price volatility and input cost pressures.

The Company has established strong brand recognition in the Confectionery and Baking industry, with flagship products such as Ding Dong, Freshup, Aamrus Candy, Chooran Chatni, Limopani, Jiggles, CupKake, and Bake Time. These brands are widely recognized for their consistent quality, reliability, and appeal, reinforcing the Company’s leading position in the market.

Hilal Foods has consistently delivered stable revenue growth while effectively navigating market fluctuations and maintaining a strong financial position. The Company offers a diverse portfolio of more than 40 products across two key verticals: Confectionery and Baking, with the largest share of revenue generated from CupKake, followed by Freshup, Jiggles, Ding Dong, Aamrus Candy, and other products. In addition, the Company has also started generating revenue through private labeling. In FY25, Hilal Foods reported total net revenue of ~PKR 17.06 billion (FY24: ~PKR 17.21 billion), of which export sales contributed ~PKR 819 million compared to ~PKR 1,369 million in FY24.

During FY25, the Company experienced a decline in profitability margins due to rising cost pressures. The gross profit margin decreased to ~24.7% (FY24: ~27.8%), the operating profit margin declined to ~3.8% (FY24: ~6.2%), and the net profit margin fell to ~1.6% (FY24: ~2.2%). The decline was primarily driven by a slight increase in the cost of sales, which remains highly sensitive, while the net margin was partially supported by reduced finance costs in a more favorable monetary environment.

The Company has demonstrated a strong growth trajectory since its inception and is now poised for the future with a clear strategic direction within its industry-specific ecosystem.

In FY25, Hilal Foods demonstrated stronger working capital discipline, underscoring improved operational efficiency and tighter cash flow management. The reduction in average inventory days to ~28 (FY24: ~32) points to enhanced demand planning and faster stock turnover, while stable trade receivable days at ~7 reflect sustained efficiency in collections without extending credit risk. Consequently, gross working capital days eased to ~36 (FY24: ~38), indicating a leaner operating cycle. Although average trade payable days moderated to ~-8 (FY24: ~-12), this remains consistent with the Company’s predominantly advance-based model.

The Company demonstrated a notable improvement in its debt servicing capacity during FY25. The EBITDA to finance cost coverage ratio strengthened significantly to ~5.1x (FY24: ~3.0x), indicating a stronger ability to meet interest obligations from operating earnings before interest, taxes, depreciation, and amortization. This improvement is further supported by the FCFO to finance cost coverage ratio, which increased to ~5.3x in FY25 (FY24: ~2.7x), reflecting enhanced coverage of finance costs through free cash flow generated from operations. Consequently, the debt payback ratio improved to ~2.4x in FY25 compared to ~3.6x in FY24, highlighting a stronger capacity to repay outstanding debt from internal cash flows.

The Company’s capital structure improved during FY25, as reflected in a reduction in the leverage ratio to ~24.5% (FY24: 29.6%), indicating a stronger equity cushion relative to debt. Total borrowings declined to ~PKR 1.82 billion (FY24: ~PKR 2.29 billion), reflecting a reduction in reliance on debt financing. The debt portfolio comprises both short-term borrowings, which account for the majority (~66.8%) and primarily support working capital requirements, and long-term facilities utilized for expansion-related investments. Meanwhile, the Company’s equity base increased to ~PKR 6.54 billion (FY24: ~PKR 6.27 billion), supported by internal profit retention. The combined effect of lower borrowings and a growing equity base has strengthened the Company’s capitalization profile and improved its overall leverage metrics.